Correlation Between BioNTech and Waters

Can any of the company-specific risk be diversified away by investing in both BioNTech and Waters at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining BioNTech and Waters into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BioNTech SE and Waters, you can compare the effects of market volatilities on BioNTech and Waters and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in BioNTech with a short position of Waters. Check out your portfolio center. Please also check ongoing floating volatility patterns of BioNTech and Waters.

Diversification Opportunities for BioNTech and Waters

0.07

Correlation Coefficient

BioNTech  Waters

Significant diversification

The 3 months correlation between BioNTech and Waters is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding BioNTech SE and Waters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waters and BioNTech is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on BioNTech SE are associated (or correlated) with Waters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waters has no effect on the direction of BioNTech i.e., BioNTech and Waters go up and down completely randomly.

Pair Corralation between BioNTech and Waters

Given the investment horizon of 90 days BioNTech SE is expected to under-perform the Waters. But the stock apears to be less risky and, when comparing its historical volatility, BioNTech SE is 1.09 times less risky than Waters. The stock trades about -0.01 of its potential returns per unit of risk. The Waters is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  32,586  in Waters on September 13, 2024 and sell it today you would earn a total of  5,941  from holding Waters or generate 18.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

BioNTech SE  vs.  Waters

BioNTech SE

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days BioNTech SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, BioNTech is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Waters

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Waters are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Waters unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BioNTech and Waters

The main advantage of trading using opposite BioNTech and Waters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BioNTech position performs unexpectedly, Waters can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Waters will offset losses from the drop in Waters' long position.

The idea behind BioNTech SE and Waters pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.